Monday, 28 July 2014

Looting the commons for fun and profit

One more sign of the privatization of the nation’s soul is the impending demise of the U.S. Postal Service, one of the last concrete manifestations of the commons, the remnants of collectively-held property that embodies and cements our nationhood.

The fact that one can wander through the streets of any locality within the sovereign boundaries of the United States and drop a letter into a box addressed to any resident of the country is a reminder that we are an integral part of a united, whole something. We pay a standard rate for that privilege because it is, or was once, important to maintain that link, not because it accurately reflects the cost of making the delivery. If the price of the stamp is insufficient, we shoulder the expense jointly because we are joined together.

Thus I can write to my friend in Hawaii, one in New Hampshire and another in the Aleutians for the same price as I send a letter to the electric utility across the East River.

The new logic, however, is strictly commercial: can UPS or FedEx deliver my messages or bring me my goods more quickly and cheaply? If so, they should muscle the USPS out of the way. It should fade away and die as a relic of an old-fashioned, dying world where political relations outranked commercial ones.

Now the finance system furthers this Triumph of the Bill by empowering mega-corporations to wipe out competition and consolidate their vast powers. Amazon, the business press informs us, has just lost $126 million in the quarter ending in June, en route to new losses five times that figure in the current period, perhaps as much as $810 million. But no matter! Amazon can still wipe out the post office on borrowed cash, now available cheap from the Federal Reserve.

If you don’t have to make a profit, it’s easy to undercut the competition with price slashing and establish a monopoly. Not incidentally, Amazon rebutted the bad profit news with an announcement that it was introducing Sunday delivery to 25 percent of the U.S. population, just as the USPS warns us it must soon cut back to five days a week.
While the postal service is thus hobbled by unfair competition, any cost-cutting measures that could affect a congressman’s district are promptly kaboshed while the government entity is pilloried for mismanagement and waste. As Wolf Richter writes at Wolf Street,

The Postal Service, which had revenues of $16.7 billion in Q2, can’t even sneeze without Congress giving it prior approval. Shutting down unneeded post offices or dropping Saturday delivery? Addressing its huge pension obligations or switching to a pension plan of the kind Amazon has (LOL)? Forget it. In return for its valiant service as Congressional and public punching bag, USPS is allowed to perform financially about the same as Amazon: losses as far as they eye can see.

Nonetheless, Amazon still trades at $300 a share, provided happy lucre for Jeff Bezos, other top management and stock speculators. Its huge recent rally started around the time the Fed threw money at Wall Street to goose asset prices. Unlike Borders, which had to close when it lost money, Amazon is unfettered by the need to be a real business. But it can continue to undermine and wreck those that are. Richter:

Their big competitor [Amazon] has unlimited resources by being able to raise billions at practically no cost. It can always sell more of its inflated shares, a safety blanket if it runs out of money. . . . When Amazon needs additional money beyond that, it sells bonds that cost it, depending on maturity, less than the rate of inflation and are thus free money.

Amazon is Exhibit A of how the Fed’s policy of flooding Wall Street and corporate mastodons with nearly free money is destructive to the rest of the economy.

Consumers eagerly rush after the savings at Amazon, just as they helped Wal-Mart destroy local business. But then you have to live with the consequences: a post-capitalist landscape littered with wreckage, and the lousy service that inevitably comes with companies who have made themselves the only game in town.